Media's Money Moves: Top 5 Trends & Future Forecasts for Monetization in 2023

Media's Money Moves: Top 5 Trends & Future Forecasts for Monetization in 2023

As we enter a new year, various macroeconomic factors are preparing to present an assortment of obstacles to both consumers and media enterprises. However, businesses are aiming to transform these challenges into advantageous situations by testing out new products, prices, and value propositions. Their objective is to minimize risk and unleash growth. This article highlights some of the upcoming trends that will influence media companies in 2023 and how these businesses can leverage these trends to their benefit.

Increased attention on economic pressures & subscription fatigue

Positive projections suggest that subscription revenues will continue to expand in 2023. Nevertheless, this expansion will be more gradual due to the ongoing global cost-of-living crisis, which is posing difficulties for media companies and direct-to-consumer revenue streams. This mounting pressure also implies that consumers will be more discerning in assessing their priorities and may choose to cancel subscriptions they no longer require. As a consequence, companies will focus on intensifying their retention tactics.

During an interview with NiemanLab, Julia Beizer, the Chief Digital Officer at Bloomberg Media, noted that "news and subscription fatigue are both very real." With the average U.S. household subscribing to double-digit services, the pandemic-driven proliferation of subscription services is prompting consumers to be more selective. To avoid losing subscribers, media businesses should focus on the following:

  1. Leveraging churn management tools, specifically those that can counter voluntary churn. By providing consumers with more flexibility across various channels, such as self-care portals, banking apps, and in-app purchases, businesses can minimize churn. Strategies for flexibility include offering subscription pauses, increased discounts, more forgiving grace periods, retry rules, and package switches.
  2. Prioritizing cost reductions and tech-enabled automation to lower the Total Cost of Ownership (TCO) across the tech stack.
  3. Experimenting with different pricing strategies to safeguard subscription revenues. Trends show that dynamic pricing models can optimize renewals, particularly for high-risk churn customers.

The continued rise of the Chief Subscription Officers (CSOs)

As subscriptions become more popular and essential for generating recurring revenue streams across various industries, businesses are recognizing the importance of creating executive positions that focus on this area. As a result, emerging roles such as Chief Subscription Officers (CSOs) are becoming more common. In the past year, Gannett, The Washington Post, Dow Jones, and DAZN, a streaming platform, have all hired CSOs or similar positions, indicating the critical nature of subscriber revenue in today's market.

The recent restructuring of senior and executive leadership teams reflects the growing significance of recurring revenue in today's market. It also underscores the importance of cross-product adoption, which is now a top priority in boardroom agendas. As a result of this shift, media businesses are expected to review their top-down metrics and adopt new strategies as they build for the future.

The final [cookie] countdown will force businesses to act in 2023

With Google's plan to sunset third-party cookies by 2024, businesses must start executing their plans in 2023. The topic of first-party data has been circulating across various forums such as dinner tables, exhibit halls, and boardrooms for several years now. However, in the final year before the cookie's demise, mass panic is expected to set in for those who have not yet recognized the significance of first-party data on advertising and subscription revenues.

Despite the challenge posed by the sunsetting of third-party cookies, there is an opportunity for media businesses to create deeper and more meaningful relationships with subscribers. This also provides an opportunity to tailor products and advertisements to an unprecedented degree. This moment represents the possibility of aligning advertising and subscriptions under the banner of data, which can be a watershed moment for media businesses and a catalyst for positive change.

To take advantage of this opportunity, businesses need to have the technology to collect first-party data through various registration funnels, surveys, and progressive profiling. They also need to have the capability to act on this data, with tools to access and analyze it, allowing for informed decision-making across the organization. As media businesses prepare for the final cookie countdown, 2023 will likely see the widespread adoption of first-party data harvesting.

Growing revenue beyond core propositions paves the way to increased bundling

Many media businesses have embraced the subscription model by transitioning from a transactional consumption model to a recurring-based consumption model. However, this approach still poses some risk as it places all eggs in one basket.

Netflix is a prime example of the risks associated with relying solely on the subscription model. In early 2022, the company reported its first decline in subscribers. It is unclear whether this decline was due to the company exhausting all possibilities for its platform or if the COVID boom had come to an end. Regardless, this highlights a real challenge faced by many media businesses that rely heavily on their subscription model. Those who become complacent and fail to adapt, evolve, and diversify may eventually be surpassed by their competitors.

Following the decline in subscribers, Netflix explored different value-added products such as gaming and merchandise. However, with the onset of the cost-of-living crisis, Netflix and other video streaming services decided to introduce Advertising-Based Video on Demand (AVOD) and FAST-based models to combat stagnant direct-to-consumer (D2C) subscription revenues. This trend is likely to continue into 2023. According to Deloitte, by mid-2023, all major video subscription services in Europe will have launched an ad-funded tier alongside ad-free offerings. This marks the emergence of a hybrid approach that combines recurring and transactional subscription and advertising revenues.

The trend towards diversification is not exclusive to video streaming services, as the publishing industry is also experiencing this shift. The New York Times (NYT) acquired Wordle in 2022 to address the challenge of engaging existing subscribers and attracting new audiences to subscribe to the brand. This approach, similar to Over-the-Top Media services (OTT), recognizes that a single core offering is insufficient. The strategy has proven successful for the NYT, as they reported significant success from non-news subscriptions, leading to revenue growth and increased engagement outside of their core offering.

Ben Cotton, Head of Subscription Growth at the New York Times, explained their strategy by stating, "The way we talk about this is, if our products at The New York Times are the solar system, then news is the sun, right in the middle, and the other products are building off of that." This approach involves using news as the core offering and building other products around it to diversify their revenue streams.

In 2023, businesses are expected to prioritize product development and diversification of revenue streams as they re-evaluate their value propositions. Brands will need to carefully consider how to combine their products to create a more attractive proposition for consumers. Smart bundling and packaging will be crucial, which can be set by the business or directed by the consumer through a-la-carte offerings.

Industry consolidation & convergence will continue despite the economic climate  

In the highly competitive media industry, mergers and acquisitions (M&A) and joint ventures have become common as businesses seek to stay ahead of the curve. Several strategic deals took place in 2022, leveraging emerging opportunities and providing a competitive edge. Examples of such deals include The New York Times' acquisition of The Athletic and Wordle, the merger between WarnerMedia and Discovery, and Microsoft's pending takeover of Activision Blizzard.

The consolidation trend in the media industry is expected to continue in 2023, driven by evolving consumer demands, technological disruption, and the macroeconomic downturn. This trend is especially prevalent in an industry dominated by global giants. As businesses seek to remain competitive and adapt to changing market conditions, mergers and acquisitions, and joint ventures are likely to be common.

In summary

Looking ahead to 2023, media organizations will face their share of challenges. Nevertheless, the year also presents opportunities for innovation and deeper engagement with subscribers. To succeed in the new year, media companies should consider the following:

  • Establish processes, technologies, and personnel to promote innovation in pricing, product, and data operations.
  • Emphasize subscriber personalization and relationships when creating product bundles, offers, and even the cancellation process, using data-driven insights.
  • Mitigate churn by exploring ways to automate and reduce costs while diversifying their offerings to address market risks.